Executors’ duty to advise family members of a person’s death

Monday, February 12, 2018

When should Executors advise family members about a person’s death or their right to bring a claim against an Estate under the Family Protection Act?

That is a difficult question, and one that can sometimes arise during administration. After all, it is not unusual for clients to remove family members from their wills – whether due to a falling out or loss of contact over time. Solicitors will inevitably follow their client’s instructions but, in doing so, advise their client that the family member who has been excluded may have a claim against the Estate under the Family Protection Act 1955. That Act permits family members who have received inadequate provision from the deceased’s Estate to seek further relief from the Courts. There are limitations on who can bring a claim and the right to bring a claim only lasts as long as there are funds available – once an Estate is fully distributed the ability to bring a claim is lost.

It goes without saying that a family member can only bring a claim against an Estate if they know the person has died. This can put the Executors into a difficult position when they are aware of family members who, for one reason or another, do not know about the deceased’s death or the terms of the will:

  • If the Executors say nothing and administer the Estate on the terms of the will, the Executors may become a target for the disappointed family members who blame the Executors for not bringing the death to their attention before the Estate was distributed;
  • If the Executors advise the family members of the deceased’s death and the terms of the will (thereby inviting claims against the Estate) the Executors may be criticised for acting against the interests of those who were named in the will as benefiting from the Estate.

That was the issue before the High Court in the recent decision of Re Carson [2017] NZHC 3144. In that case, Mr Carson directed that the residue of his estate (which included substantial lotto winnings) be paid into a discretionary trust for various beneficiaries. Mr Carson’s will did not make any provision for his family. He also directed that no death notice be published and family members were not to be contacted. If the Executors followed Mr Carson’s instructions, there was a risk that the Estate would be distributed before his family members were aware of his death and, therefore, able to bring a claim under the Family Protection Act. The Executors sought guidance from the Court as to their obligations to Mr Carson’s family, in light of his express instructions that they not be advised of his death.

The High Court held, in accordance with the Court of Appeal decision of Re Sadler v Public Trust [20009] NZCA 364, that there was no general duty to advise family members of the deceased’s death or their rights under the Family Protection Act. The policy behind this decision was clear – Executors cannot be expected to chase down every family member (including parents, siblings, children and grandchildren) as this would only increase the cost of administering Estates and lead to unnecessary delays. However, Executors cannot actively hide the fact of death from family members and must contact any family members who have shown an active desire to bring a claim against the Estate. The Court was not required to consider which (if any) of Mr Carson’s family should be advised of his death, or what information should be provided, as members of his family contacted the Executors before the Court released its decision. It seems doubtful that the Court would have ordered the Executors to contact Mr Carson’s family, had there been no contact prior to the decision being released.

This is likely to remain an area of concern for Executors as they seek to juggle competing obligations between those who are named in the Will and family members who have a potential claim under the Family Protection Act. While Executors are not under any general obligation to advise family members of a death, there will be occasions when Executors are required to do just that. It is unclear where that line is to be drawn.

If any Executors are unclear about the extent of their obligations, they should seek legal advice and, if necessary, seek directions from the Court before acting.

Please contact Ayleath Foote or a member of our trusts team if you require further information.

 

Disclaimer: the content of this article is general in nature and not intended as a substitute for specific professional advice on any matter and should not be relied upon for that purpose.

Area of expertise

Share this publication